PG&E target of new federal grand jury probe

SAN FRANCISCO -- Federal court sources said Tuesday that a new grand jury probe of PG&E is underway. While the focus of the probe has not been announced, it follows disclosure by the utility that it is being investigated by the U.S. Attorney's Office in connection with a natural gas explosion in March in Carmel that damaged a vacant home but caused no injuries.

The revelations come on the heels of this week's not-guilty plea by PG&E to a 28-count federal indictment on felony criminal charges, including obstruction of justice, in connection with a fatal 2010 gas pipe explosion in San Bruno that killed eight people.

The U.S. Attorney, the state Public Utilities Commission and local authorities in Carmel are investigating the explosion in the posh seaside town, PG&E said in its most recent quarterly regulatory filing at the end of July. And the utility warned that additional investigations could commence regarding the Carmel explosion.

"It is reasonably possible that fines could be imposed on the Utility, or that other enforcement actions could be taken, in connection with this matter," PG&E said in the filing. The further actions could include another criminal indictment.

The U.S. Attorney's Office declined to comment on the new grand jury probe.

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"We received a subpoena from the U.S. Attorney's Office related to the incident in Carmel," Greg Snapper, spokesman for San Francisco-based PG&E, said Tuesday. The utility added that it is focusing on a far-reaching upgrade of its natural gas pipelines that will make the system the nation's safest.

The federal case regarding San Bruno could lead to a fine for PG&E of up to $1.13 billion, and a separate PUC investigation into the San Bruno blast could result in a fine against the utility of up to $2.45 billion.

The U.S. Attorney investigation of the Carmel explosion is underway at the same time as the new federal grand jury probe, but the timing could be a coincidence, because the focus of the new grand jury probe is unknown. Court sources, including a clerk for U.S. District Judge Thelton Henderson, who is presiding over the PG&E case, confirmed the existence of the new grand jury.

Peter Henning, a professor of law with Detroit-based Wayne State University, said the new grand jury probe indicates that "the prosecutor is being aggressive."

"They are sending a message to PG&E that they are not done," Henning said. "That ratchets up the pressure on PG&E."

Prosecutors typically are barred from using a new grand jury to produce fresh evidence for a case in which it already has an indictment, legal experts say. However, the lines between two separate cases can become blurred.

"It is pretty common for one investigation to lead to another," said Rory Little, a law professor with UC Hastings College of the Law in San Francisco.

PG&E indicated in its regulatory filing that inaccurate gas records were a factor behind the Carmel explosion. PG&E's shoddy records and flawed maintenance efforts are deemed to be the principal factors behind the fatal San Bruno blast.

"The danger for PG&E is there are other cases out there, or evidence of conduct similar to San Bruno, that could cut off an avenue of defense," Henning said.